China and India Build Internal Supply Chains — Timothy Taylor

One of the key questions in the escalating US trade disputes with China and other countries is how much the economy of other countries depends on trade. The answer helps to determine how much leverage the US has in trade disputes. Thus, it's interesting to note that starting about a decade ago, both India and China started reducing their dependence on exports as a source of growth, while doing more to build internal supply chains and relying more on domestic products....

Building national self-sufficiency but not autarchy. There is a tradeoff here between national sovereignty/security and economic efficiency. Global supply chains can be more efficient, but resilience requires national supply chains to overcome dependence on foreign powers. 

This is especially the case at a time of great-power rivalry that as is again rising, with a new cold war and hybrid warfare, including economic warfare, while neoliberal globalization is receding. This results in decoupling of economies and a building of national self-sufficiency. 

Russia is already a go way along in developing self-sufficiency and decreasing exposure to Dutch disease, or dependence of exports of extraction, petroleum in particular.

Agitation is also growing in the US to develop greater self-sufficiency after decreasing it to increase economic efficiency while neoliberal globalization was expanding in reach and depth.

Now de-dollarization and decoupling are the order of the day. China, Russia and India are cooperating on this.

Conversable Economist
China and India Build Internal Supply Chains
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Stela Rubínová, Emmanuel Dhyne — The supplier network of exporters: Connecting the dots

Even in export-oriented industries, only a handful of firms ship their goods abroad. These firms are systematically different from their purely domestic counterparts. This column sheds light on the domestic supply chain of exporters to uncover firms whose production is exported indirectly. Accounting for indirect exporters brings the empirics of international trade closer to the modern structure of production, characterised by many stages in possibly many locations. These findings suggest that the distributional effects of globalisation go beyond the exporters versus non-exporters dichotomy.….

Conclusion

A better understanding of the production structure that underpins observed international trade flows is important for assessing trade-related policies. In complex economies that are characterised by a large degree of production fragmentation, customs data alone provide limited information for answering questions such as which firms are impacted by trade policies, or how foreign demand shocks can propagate throughout the domestic economy. The established fact that exporters are a small club of the best performing firms gained them the label of ‘export superstars’. These firms, however, are just a tip of the production iceberg as they are embedded in domestic networks of firms that are exceptional performers themselves. Thus even though direct exporters shine the brightest, they are in fact part of bright constellations. These findings emphasise that the group of stakeholders in trade liberalisation negotiations is much wider than the ‘happy few’ who export directly and that distributional effects of globalisation go beyond the exporters versus non-exporters dichotomy.

vox.eu
The supplier network of exporters: Connecting the dots
Stela Rubínová, Emmanuel Dhyne